For the experience, what do some of you pro’s think about putting together a team of about 3-4 newbie’s in my area and doing a rehabb? We will do the project from start, finding the right house, the financing, the fixing or someone to fix it and the selling. The profit might not be big but the experience will be great.
It sounds like a good way for all of your to get your feet wet and minimize individual risk. Just be careful. You need to make sure you have a WRITTEN agreement. It could also go south very quickly.
I second Marcus’ response…good idea, put the details of the partnership in writing!
Thanks for responding. Can you guys tell like what are some the details that should/must be in wrtting?
Do you know an attorney you could ask? Off the top of my head I can think of: % ownership, who’s contributing what funds, who’s responsible for what once it is owned, who decides when to sell, etc, etc.
Ideally, you’d want something that says:
Bob will provide $5k and have 25% ownership.
Sam will provide $10k and have 50% ownership.
Bill will provide $5k and have 25% ownership.
Repairs will be funded and supervised by Bob. Sam and Bill will each remburse 1/3 of repair costs to Bob on a monthly basis. Repair bills are due by the 5th of the following month and due on the 15th of that month. Repairs must be completed by xx/xx/xx or (insert possible penalty of something to make sure stuff happens on time).
Holding costs will be funded by Sam. Outline responsibilities like above, etc. %'s paid, date bills must be provided by, and bill due dates.
House will listed on the market for sale at the agreement of all 3 partners in writing. etc, etc. Price will be determined by realtor evaluation (or some method. Basically so one person doesn’t demand a rediculously low or high price.)
You want to make it VERY clear who is specifically responsible for each aspect of the transaction from your closing to the closing of you selling it. You want specific amounts or %'s for money and specific dates things must happen by and preferably with penalties.
Just remember, anything NOT in the contract is up to the discresion or whoever feels like deciding it. That’s usually not a good thing, especially if things go poorly.
That should be enough to get you thinking about it because there are a LOT of details that need to be accounted for.
I think that this is an invitation to disaster. It is very difficult to partner up with even one person, let alone 3 other newbies. I can tell you from experience that people don’t always do what they promise. For example, you may agree that each person will share equally in the work. Then, someone can’t or won’t put in the time. Everyone else becomes angry and soon the “partnership” is a disaster. Also, did you know that unless you have an LLC or other asset protection entity, that you are PERSONALLY responsible for the actions of your partners. For example, if one of your partners gets in an accident on the way to your rehab project, you can be sued and would be legally liable for the accident.
Finally, why would you want to partner up with a newbie? Always try to partner with someone who has something to bring to the table. I’d suggest trying to partner with an experienced investor and then find something that YOU can bring to the table!
I agree with propertymanager. This isn’t rocket science. If the deal makes sense, do it yourself if possible. Only if you need money should you partner up with someone. And be careful. Money will cause some folks to show you a side which will surprise you.
If you want to do something fun with your buds, go to a ballgame together or go out and have a few beers.
There are two types of partnerships those that work and those that do not!!!
I do not like either!!!
This is why I post on here, I get good advice. The truth and nothing but the truth. Thanks all you responding.
Where the Hell have you been??
Hit me with a PM.
In general I like the idea, except for the part of doing it with newbies like me. Three people without the experience of a deal under their belts is asking for problems. But, if any of the veteran’s on this board are willing to set up an LLC or an S Corp on a project with a newbie, I think that could be beneficial all the way around. The veteran’s protected, the newbie’s protected. If a veteran wants to take advantage of the newbie and rip every penny out of the deal, so be it. That’s the price of education and it would also mean the end of that veteran as a mentor because they probably wouldn’t get more than one chance to steal that type of money from someone without one of the “stand up” people on here calling them out on it. I’d even structure the deal accordingly in the teacher’s favor by a few percentage points. In my mind the few K’s it costs in the difference on the potential profits are worth infinitely more than any Carlton Sheet’s type course for the same money. These are real deals. The newbie’s learn to do deals and eventually we can mentor those that come behind us. I can’t think of a better way to build this little forum into a pretty interesting and powerful REI tool.
I look at it this way—the first time I rode a bike it had training wheels on it. The bike I’m trying to ride now has six figures attached to it.
Business with strangers :shocked: :banghead: :hammerhead: Did I mention :flush: Why ge Dave tell us how you really feel, he he he.I have a very hard time trusting strangers after living in Florida for 7 years.The Capital of SCAM artists mostly in real estate and contracting.We invest in our property with the sound mind that if it fails its our fault.NOBODY is going to slack off and blame us for their failure because we are not going to get in bed with them to begin with.However you doo need to buddy up with those that are tied to LIGITIMATE business’s to ASSIST you not be your partner.IE;the banker the lawyer the realtop .People who have a licence to loose not just $20k the got when grandma croaked.BE CAREFUL in you choices folk…And thats all I have to say about that ;D